08 Jun Kansas Legislative Update
The Kansas legislature recently amended provisions of the Mortgage Business Act (“Act”), effective July 1, 2016.
KANSAS SENATE BILL 369
“Application” means the submission of a consumer’s financial information, including the consumer’s name, income and social security number to obtain a credit report, the property address, an estimate of the value of the property and the mortgage loan amount sought, for the purpose of obtaining an extension of credit.
“Bona Fide Office” means an applicant’s or licensee’s place of business (formerly “principal” place of business) with an office that:
- Is located in Kansas;
- Is not located in a personal residence;
- Has regular hours of operation;
- Is accessible to the public;
- Is leased or owned by the licensee and serves as an office for the transaction of the licensee’s mortgage business;
- Is separate from any office of another registrant; and
- Is accessible to all of the licensee’s books, records and documents.
“Commissioner” means the State Bank Commissioner or designee, who will be the Deputy Commissioner of the Consumer and Mortgage Lending Division of the Office of the State Bank Commissioner.
“Individual” means a human being.
“Mortgage Business” now includes holding the rights to or offering to solicit, place, negotiate, acquire, sell or arrange for others, mortgage loans in the primary market.
“Mortgage Loan” means a loan or agreement to extend credit made to one or more individuals which is secured by a first or subordinate mortgage, deed of trust, contract for deed or other similar instrument or document representing a security interest or lien upon any lot intended for residential purposes or a one-to-four family dwelling, located in Kansas, occupied or intended to be occupied for residential purposes by the owner, including the renewal or refinancing of any such loan.
“Mortgage Servicer” means any person engaged in mortgage servicing.
“Mortgage Servicing” means collecting payment, remitting payment for another or the right to collect or remit payment of any of the following:
- Insurance; or
- Other payment under a mortgage loan.
“Nationwide Mortgage Licensing System and Registry” means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of mortgage loan originators.
“Not-for-profit” means a business entity that is granted tax exempt status by the Internal Revenue Service.
“Primary Market” means the market wherein mortgage business is conducted including activities conducted by any person who assumes or accepts any mortgage business responsibilities of the original parties to the transaction.
A person who is licensed as a supervised lender is no longer exempt from the Act. However, not-for-profit entities that provide mortgage loans in conjunction with a mission of building or rehabilitating affordable homes to low-income consumers are now exempt.
The amendments clarified that a licensee under the Act is not required to obtain any other license for the sole purpose of conducting non-depository mortgage business.
Each licensee must make available the evidence of licensure of each licensed location in a way that reasonably assures recognition by consumers and members of the general public.
All solicitations and published advertisements concerning mortgage business directed at Kansas residents, including those on the internet or by other electronic means, must contain the name and license number or unique identifier of the licensee, on record with the commissioner. Each licensee must maintain a record of all solicitations or advertisements for a period of 36 (previously 25) months.
In addition to powers previously granted to the commissioner, the commissioner may now exercise the following powers:
- Receive and act on complaints, take action designed to obtain voluntary compliance with the provisions of the Act or commence proceedings on the commissioner’s own initiative;
- Provide guidance to persons and groups on their rights and duties under the Act;
- Enter into any informal agreement with any mortgage company for a plan of action to address violations of law; and
- Issue, amend and revoke written administrative guidance documents in accordance with the applicable provisions of the Kansas administrative procedure act.
Except for refund of an excess charge, no liability is imposed under the Act for an act done or omitted in conformity with a rule and regulation or written administrative interpretation of the commissioner in effect at the time of the act or omission., even if a court or other authority later deems the rule, regulation or administrative interpretation to be invalid for any reason.